Getting aerospace through the crisis together

Key insights from Aerospace UP Week

The aerospace industry is experiencing one of its worst ever market meltdowns. Our research shows that businesses in the aerospace supply chain have five priorities for right now: providing safe and productive workplaces; creating new business; ensuring healthy cash flow, developing a resilient supply chain and innovating to enable productivity and diversification. These areas are encompassed by our five-point plan for rescuing and recovering aerospace and preparing it to be in the strongest position possible for the upturn in air travel and aircraft production.

We recently partnered with the University of Nottingham, one of Europe's best aerospace universities, to run five practical events based around these five pillars and building on the results of our supply chain survey. The series was delivered by the Aerospace Unlocking Potential (Aerospace UP) programme, a £20 million project designed to foster innovation in the Midlands aerospace supply chain.* We brought together aerospace experts from across the industry who shared their insights, provided guidance and discussed key issues.

Five key themes emerged from each event

1. Safety is a top priority but redundancies are hard hitting

Safe and productive workplaces remain a top priority for the aerospace supply chain. Aerospace business leaders, Sam Handley of Swiftool Precision Engineering and Peter Bruch of AE Aerospace, explained how established measures are now in place across the industry because many organisations continued to operate throughout the lockdown to meet customer requirements and to help deliver parts for ventilators required by the NHS.

However, with companies drastically trying to reduce costs, redundancies are being made right across the country. Larraine Boorman of Optima UK and Matt Harris of Gleeson Recruitment reported that some engineers are leaving the sector and taking jobs in areas where there are more opportunities for their talents right now. The aerospace industry needs to be smart in the way it retains talent so that our region does not lose its capabilities. Talent Retention Solutions is just one of the initiatives in place to help redeploy professionals across the industry, as Chris Jarman explained. The University of Derby also shared funded opportunities for taking on graduates to help continue to grow talent while supporting productivity levels now.

Watch and listen to the recording here.


2. Fierce competition must not crash the supply chain

Robert Thomson, Partner at Roland Berger, gave a thorough overview of the impact of the crisis on the aerospace industry. Although some airlines have begun operating and are planning to increase their operations throughout the remainder of the year, there is still the potential for impact from a second wave of the pandemic, as is being experienced in some parts of the world.

COVID-19 has disproportionately impacted Boeing and Embraer’s order books and there are concerns that Airbus’ forecast production rates may be optimistic, meaning there could be more bad news to come.

The aerospace primes are in fierce competition, giving airlines price concessions and passing these pressures down the supply chain tiers. There are concerns that, if change is handled poorly, it could crash key parts of the supply chain. When orderbooks pick up, there is a risk that some suppliers won’t be in a position to deliver and market share could be lost.

Christine Koch from the University of Nottingham shared funding opportunities available to support aerospace businesses in the Midlands through the Aerospace UP programme both to support challenges during the crisis and invest in technologies that could open opportunities.

Watch and listen to the recording here.


3. A race to the bottom in terms of price could have damaging impacts

Effectively managing relationships with customers and suppliers is critical right now, particularly when under pressure to meet significant cost reductions. Some customers are demanding blanket price reductions and there are concerns that this is not always being done with integrity.

It is vital that we take steps to ensure a resilient supply chain. Aerospace makes a significant contribution to our economy and employment in the UK. The government should be looking closely at the sector and ought to be very concerned about the shrinking civil aerospace orderbooks and their impact on the manufacturing base in the long term. Assumptions should not be made that the industry can just be stopped and restarted later.

We need a solid strategy for aerospace in the UK and must protect our capabilities now.

Watch and listen to the recording here.


4. There are still real business opportunities

Many businesses are considering diversifying into new markets and we highlighted opportunities in the rail industry across the Midlands as an example with Rachel Eade from the University of Birmingham. Chris Gane, Business Specialist, Aerospace at the Department for International Trade, shared plans for the UK trade event pipeline and detailed potential openings with Boeing. Richard Brown of Naveo helped us understand some dramatic changes in the aircraft MRO (maintenance, repair and overhaul) market.

Opportunities are there for the aerospace supply chain but companies will need to be open minded and inventive in their approaches to widening their markets.

Dr Zsofia Toth, from the University of Nottingham Business School, also shared trends in digital marketing and approaches that could give aerospace companies competitive advantage. This was timely given companies are having to carry out business development virtually at the moment.

Face-to-face meetings are still generally perceived as best for building trust across the aerospace industry. However, it will be some time until physical trade events return and we are anticipating that digital meetings will remain in some capacity after the crisis.

Watch and listen to the recording here.


5. Innovation can be key to increasing productivity and diversifying

Our research shows that innovation is currently seen as a lower priority for aerospace businesses. We believe that one of the reasons for this is because many perceive innovation as simply being about the development of future technologies. However, innovation can be thought of far more widely, and it can help in a crisis too.

The Aerospace UP team gave examples of how innovation can be used to enable businesses to survive and compete through a crisis by increasing margins, efficiency and productivity as well as allowing them to expand capabilities so they can diversify into new markets. Professor Pat Wheeler and Hitendra Hirani from the University of Nottingham showed us that there are opportunities for small companies to participate in major R&D programmes on the electrification of aircraft, and there are additional funding opportunities firms can be planning to take advantage of in future.

Meanshile, funding is available through the Aerospace UP programme to support companies with innovating in ways that could help right now.

We were delighted that the Aerospace UP series proved so popular and demonstrated that, by bringing together aerospace experts across industry, academia and consultancy, we can work through critical and complex issues, helping rescue and rescue aerospace together.

Watch and listen to the recording here.

* Aerospace UP is part-funded by the European Regional Development Fund (ERDF). The programme provides innovation business support and collaborative R&D grants to small- and medium-sized supply chain companies in the aerospace industry across the Midlands. It is a pan-LEP project, covering the Black Country, Coventry and Warwickshire, Greater Birmingham and Solihull, Stoke and Staffordshire, D2N2, SEMLEP, Greater Lincolnshire, Leicester and Leicestershire. It is being delivered by the University of Nottingham and the Midland Aerospace Alliance through to the end of December 2022.